Asset Stewardship Expectations –A Guided Tour Offshore ...

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Asset Stewardship Expectations – A Guided Tour

September 2019

Offshore Europe 2019


Introduction

Geoff GreenhoweFacilities Engineer, Southern North Sea & East Irish Sea

Session Objectives, Format & Participation

3Participate via Slido.com, event number #1646, Offshore Europe – Asset Stewardship Expectations1

Objectives

An overview of the industry’s recently revised and enhanced Asset Stewardship Expectations including what they are, the value they bring and how to use them.

Format

• Introduction • An Industry Perspective• The Refresh• Success Story – Cessation of

Production• Success Story – East of Shetland• Summary, Q&A and Close

3 easy steps to participate

Audience Participation

?

Open browser Go to slido.com Enter event code

Audience Poll 1

4Please vote via Slido.com, event number #1646, Offshore Europe – Asset Stewardship Expectations2

What do youknow about theAsset Stewardship Expectations?• Not seen much of them

• Could name 3 of them

• Have seen them in action

The Asset Stewardship Expectations

53

STEWARDSHIPEXPECTATIONS

ANNUAL STEWARDSHIP

SURVEYBENCHMARKING

TIERED STEWARDSHIP

REVIEWS

Index Asset Stewardship Expectations

SE1 Joint Venture Hub Strategy

SE2 Delivering E&A Work Programmes

SE3 Optimum Use of Subsurface Data

SE4 Well Activity Performance

SE5 Robust Project Delivery

SE6 Integrated Field Management

SE7 Commercial Alignment and Delivery

SE8 Technology Deployment

SE9 Build a Culture of Collaboration

SE10 Cost Effective Decommissioning

Role of the ExpectationsAs

set S

tew

ards

hip

Expe

ctat

ions

MER UK Strategy Clauses

Safeguards OGA plansCentral & Supporting obligations Behaviours & cost

Non MERUK delivery

Primary linkSecondary link

Not relevant

Key

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34

1 Joint Venture Hub Strategy2 Delivering E&A Work Programmes3 Optimum Use of Subsurface Data4 Well Activity Performance5 Robust Project Delivery6 Integrated Field Management7 Commercial Alignment & Delivery8 Technology Deployment9 Build a Culture of Collaboration

10 Cost Effective Decommissioning

6Good practice in support of MER UK 4

• Licence model clauses require ‘good oilfield practice’• Expectations are an industry and OGA view of ‘good practice’• Sets out how stakeholders may meet MER UK obligations

An Industry Perspective

Steve GardyneVice President Greater Fulmar Area Assets, Flotta and Energy Transition


Asset Stewardship Refresh

Asset Stewardship is crucial to maximising economic recovery from the UKCSEffective stewardship means;

Asset owners consistently do theright things to identify and then exploit opportunities

Assets are in the hands of those with the collective will, behaviours and capabilities to achieve this

2019 Refresh Required• Stewardship Expectations

implementation is critical to delivering MER UK

• Significant basin challenges ahead around performanceand activity

• Content update by OGA in deep collaboration with Industry

• Stimulate activity that leads to resource maturation (new)

8Stewardship Expectations are clear expression of “good practice” in support of MERUK 5

Stewardship Expectationsdeveloped & deployed in 2016• OGA expanded stewardship to full EP

lifecycle• OGA, working with industry, defined the

agenda• Stewardship Expectations set out what

good looks like• OGA set in place an integrated framework

for stewardship using tiered stewardship reviews

Reserves and Resources Progression in 2018 OGA UK oil and Gas reserves and Resources Report, end 2018

Industry Engagement

9Critical to engage a good cross section of industry players6

• Over 40 organisations, 90 individuals engaged

• Breadth of lifecycle• Diagonal slice through industry• Licensees with Exploration focus• Multinational through to midsize

• Non Operated Licensees• Tier 1 contractors• Infrastructure Owners• Trade Bodies• PE Backed

Jon Graham Apache MDas Industry sponsor

MER Forumto support

Breadth of Industry companies interviewed covering the breadth of

the lifecycle

Diagonal slicethrough industry

Update / Monitor through project….


The Refresh

Alana FinlaysonSenior Exploration Geologist, Northern North Sea & West of Shetland

2016 Stewardship Expectations

1 Hub Strategy

2 E & A Subsurface Work Programme

3 Optimum Use of Subsurface Data

4 Licence Activity, Decision Points & Milestones

5 Robust Project Delivery

6 Production Optimisation

7 Information Management

8 Technology Plan

9 Collaboration

10 Planning for Decommissioning

10 Expectations

1 Joint Venture Hub Strategy

2 Delivering E&A Work Programmes

3 Optimum Use of Subsurface Data

4 Well Activity Performance

5 Robust Project Delivery

6 Integrated Field Management

7 Commercial Alignment and Delivery

8 Technology Deployment

9 Build a Culture of Collaboration

10 Cost Effective Decommissioning

11

REMOVED

Ten refreshed stewardship expectations owned within OGA and worked with industry7

Stewardship Expectation RefreshWhat’s changed?

• New Commercial expectation

• New Wells expectation

• Information management removed

• Merging of others

NEW

NEWMERGED

MERGED

12Please suggest via Slido.com, event number #1646, Offshore Europe – Asset Stewardship Expectations8

How many wells have been drilled on the UKCS to date?

Audience Poll 2

The Issue 2016 2017 2018

No. Spuds 109 94 101

Non Productive Time % 17 15 23*

Surveillance % N/A 8 2*

Intervention Rate % N/A 14 8*

* Provisional numbers

THE ISSUE

STRATEGY INDUSTRYLESSONS LEARNEDSTEWARDSHIP

• Regulatory compliance• Increase activity levels• Improve activity performance

• Well activity performance• Lessons learned, used & shared• Productivity of wells

• Identify common opportunities• Share basin knowledge• Inform industry workstreams

• Competitive well delivery Taskgroup

• Reservoir & well optimisation Taskgroup

Transformational increase in well activity & management required9

Wells

OGA RESPONSE

INSIGHTSREPORT

LESSONSLEARNED

WELLS STRATEGY


SE4 Well Activity Performance

ExpectationThe OGA expects that Operators maximise the value of wells throughout the lifecycle

Reason for the Expectation

• Well costs are around 50% of development (and decommissioning) capex investment in the UKCS

• Approximately 30% of 2,700 active wells across the UKCS are shut in. Coupled to this, there is a low average intervention and surveillance rate of approximately 14% across the UKCS

• Maximising the value of wells throughout their life will support resource maturation & hence the MER UK strategy

Delivering the Expectation

Well construction performance to increase value of wells• Well management- maximise the value of existing wellstock• Lessons learned, used and sharedDemonstrating Delivery

• Annual Stewardship Survey, Performance Benchmarking & Tier Reviews

1410

Commercial Good Practice

• The Wood Review highlighted the need for improved collaboration and a reduction in the commercial and legal complexity of working in the UKCS

• Challenged the industry to find ways to simplify the complexity and significantly reduce the time required for commercial and legal negotiations

1511

SE7 Commercial Alignment and Delivery

ExpectationThe OGA expects that the adoption and implementation of good commercial practice should enable activity to be progressed in a manner, and at a pace, consistent with obligations in the MER UK Strategy

Reason for the Expectation• The OGA is aware of poor commercial practices and/or parties’ mis-alignment causing

delay and eroding value, consequently failing to comply with MER UK Strategy• Supports and encourages the adoption and implementation of existing voluntary codes

of practice already put in place by industry

Delivering the Expectation• Demonstration that MER obligations are taken into account when entering into and

pursuing commercial activity• Give due consideration to obligation to collaborate with counterparties and the OGA• All commercial activity should be carried out in a timely manner

Demonstrating Delivery• Annual Stewardship Survey, Performance Benchmarking & Tier Reviews

1612


Success Story – Cessation of Production

Trish AmundrudSenior Reservoir Engineer, Central North Sea

1813



What could be an appropriate action to best steward the asset?

Audience Poll 3

• Obtain new seismic and refresh the subsurface understanding

• Look for remaining optimisation activities within the existing wells and facilities

• Reach out to third party business

• CoP the asset

Joint Venture Hub Strategy• JV better aligned and life extension evaluation

underway• Hub strategy developed

20Success Story – using the expectations to deliver MER UK15


As a result of OGA challenging CoP request:

Delivery of MER UK

Hub strategy (SE1)

Seismic (SE3)

JV alignment (SE1)

Opportunity portfolio (SE6)

Optimum Use of Subsurface Data• New seismic purchased and interpreted

Integrated Field Management• Evaluation of infill drilling opportunities


Success Story – East of Shetland

Jan ManoharanAsset Stewardship Lead, Northern North Sea & West of Shetland

East of Shetland Overview

• Application of Stewardship expectations in service of Area Plans

• Area Plans are a shared view amongst industry participants of the optimal way to achieve MER UK in a particular geographical area of the UKCS based on analysis of evidence

• Integrate exploration, development, production, operations to maximise economic recovery

• The East of Shetland is one of a number of regions identified with strategic value arising from the development of a commonly owned Area Plan

2216

The Challenge (Area view in 2017)

• Late life infrastructure high interdependency between user fields;cost and integrity challenges

• Significant number of single points of failure that can prematurely cut offsections of infrastructure (‘Domino Effect’)

• Opportunity to reduce costs, to enable further drilling, protect longest lived users, provide more certainty around COP and reduce cost of decommissioning by shared learning and collaboration.

Sanctioned

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

No Longer Economic

2317

Industry Delivery to DateJoint Venture Hub Strategy (SE1): • Identified potential for 65% OPEX reduction in core

infrastructure and resulting in 10 year extended production from the Area

Integrated Field Management (SE6):• Joint development with multiple FDPAs to add 30

mmboe of economic reserves in the area

Cost Effective Decommissioning (SE10):• Identified areas of collaboration with a view to

saving £1 billion of decommissioning expenditure

Well Activity Performance (SE4):• Increased confidence led to 29 new development

wells estimated over the next 3 years

Technology Deployment (SE8):• Joint workshop at the OGTC, requested by

Operators, resulting in technology and commercial options to tackle challenged reservoirs

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Extended Economic Life

Costs

2418

Dotted Lines: 2016 SurveySolid Lines: 2018 Survey


Summary, Q&A and Close

Steve GardyneVice President Greater Fulmar Area Assets, Flotta and Energy Transition

William WilsonAsset Stewardship Lead, Central North Sea

Steve Gardyne, Vice President Greater Fulmar Area Assets,Flotta and Energy TransitionStewardship Expectations (SEs)

• Link directly to the MER UK Strategy• A valuable toolkit – apply across the whole E&P lifecycle• An OGA and Industry view of “good practice” • Where applied - seen value delivered • Good Stewardship presents a significant opportunity for UKCS

Want to find out more?

• Search “ STEWARDSHIP EXPECTATIONS” (1st hit is OGA website page!)

− 10 SE’s available for download

SE Roll-out:

• Offer of OGA support to Operators / Licensees to raise awareness in organisations− Already significant operator interest and requests for support

26Stewardship Expectations are clear expressions of “good practice” in support of MERUK19


ANNUAL STEWARDSHIP

SURVEYBENCHMARKING

TIERED STEWARDSHIP

REVIEWS

Industry Delivery to Date

20

Thank you, any questions?

One Final Audience Poll


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